Hills Holdings to shed jobs in restructure

Hills Holdings chief executive Ted Pretty...“My strong view is that recent events are a call to action to fundamentally review the way we operate and perform,” he told shareholders.” Photo: Tamara Voninski

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Steel products and electronics maker Hills Holdings will book up to $110 million in impairment and restructuring charges in the half year as part of newly appointed chief executive Ted Pretty’s plans for transformation and growth.

Speaking to shareholders for the first time at the annual general meeting in Adelaide
on Thursday, Mr Pretty said the company would focus on higher growth sectors of communications and technologies to balance its exposure to the construction and steel sectors.

“By 2015, our target is to have more than 75 per cent of our revenues from non-steel activities in particular from technologies and communications,” he said.

Hills’ building & industrial division, which includes the struggling Orrcon Steel and, separately, Fielders, brands, will make up the bulk of the impairment restructuring costs associated with closing branches and plants. Hills has up to 2700 full time and contract workers, with about 1000 employees involved in the steel businesses.

Hills was previously unable to attract an appropriate price for Orrcon Steel before Mr Pretty’s appointment. While the focus is transformation, Mr Pretty said it will review acquisitions that offer growth and counter cyclical balance and also consider selling assets. But only if a “sensible price” is offered.

Meanwhile, the structure and supply chain of Hills’ electronics and communications division, which includes supplying antennas and manufacturing alarms, will be simplified. The group’s lifestyle and sustainability division, which produces the iconic Hills Hoist, would consolidate activities, he said.

The impairment and restructuring costs are expected to deliver pretax savings of $10 million-$15 million for the second half of 2012-13. This rises to a total of $30 million-$40 million in pretax savings for the 2014 financial year.

Hills said in October that due to persistent subdued economic activity and a steeper than expected decline in construction, first quarter performance had been worse than predicted.